That’s at least how much money was left on the table by Tropicana Atlantic City‘s state-appointed conservator, Justice Gary Stein, when he chucked out all the first-round bids last spring. One of the lower known offers at that time was Colony Capital‘s $850 million — far more than the $700 million for which Stein has had to settle.
(It does, however, hit the benchmark set by UNLV’s David G. Schwartz, who gets the Nostradamus Award for correctly predicting the eventual sale price.)
Never fear, said Stein when giving the thumbs-down to Colony and other bidders, there’s a billion dollars to be had out there. Not only did Stein have visions of sugarplums and inflated Trop valuations dancing in his head, he’d also been exchanging some ex parte pillow talk with companies who led him to believe there were big bucks to be reaped by the state, if only he’d reopen the bidding.
If there was any doubt remaining that Stein was a damn fool — and that the New Jersey Casino Control Commission, which appointed him, was following him through the looking glass — it has now been erased. Stein had the opportunity to strike while the Trop iron was hot. Instead, he dithered and dithered, then dithered some more. All the while, Atlantic City casino revenues continued to trend downward, as did the Trop’s market value.
Stein’s eventual pick, Cordish Co., was one of the spurned first-round candidates and it’s unclear how Cordish’s initial offer compares to the new one. Even so, Cordish was the logical choice, especially with Trop-savvy executive (and former regulator) Dennis Gomes on board. In essence, Stein has spent a great deal of extra time and money to arrive at a result that could and should have been achieved months ago. If he’s keeping the previous bids secret (and Cordish could still be outbid at bankruptcy court), it keeps some of the egg off his face.
Stein’s salient accomplishment has been to fling the door wide open for Tropicana Entertainment CEO Scott Butera to try and throw a body block on the deal. He’s right to call Stein’s timing “odd,” seeing as how the judge had three more weeks to wait for a better offer to materialize. He’s dragged what was supposed to be an expeditious resale process out for nine months. What’s three more weeks?
What’s also odd, though, is that Butera hasn’t submitted a petition for the reconveyance of the A.C. Trop that he says he wants. He’d better get on the stick, and faces a few obstacles. As he’s pretty much acknowledged, Butera has to convince the NJCCC that TropEnt is now a William J. Yung III-free zone. Also, if the state were to reconey the Trop to Butera, it would have to forego the revenue that might be realized from the Cordish sale. There may not be much appetite for that.
Cordish, for its part, is talking about putting another $100 million-$200 million into the Trop. Butera’s TropEnt is mortgaged to the topmost hair of its head and would be hard-pressed to match Cordish’s proposed capital improvements.
Stein might have avoided this if he’d sold the Trop with dispatch at a time when TropEnt parent Columbia Sussex was in disarray. By taking the tortoise-powered course he did, Stein gave Butera time to reorganize and counterattack. If the NJCCC goes through a year of shopping around the Trop only to have a court hand it over to Butera, this time the fault will be entirely the commission’s own.
What a complete frigging botch.
